When planning for retirement, the one question most people can’t answer with any certainty is this: How many years of retirement do you need to fund?

It’s an important question to answer, especially since getting it wrong could mean an underfunded retirement. “You don’t want to underestimate the risk of outliving your money,” says Paula Hogan, the CEO and founder of Hogan Financial. “Protecting against that risk is fundamental to good financial planning.”

In general, there are three methods to consider. You could plan on funding retirement to your and your spouse’s life expectancy; or you could plan on funding to a date certain, say age 95 or 100; or could plan on funding based on probabilities — the odds of you and your spouse living to certain ages.

So, which method might you consider?

Life expectancy

Using life expectancy to plan for retirement is fairly easy and straightforward. You would simply determine how many years you can expect to live in retirement and then accumulate enough money to fund those years. For instance, a woman turning age 65 today can expect to live, on average, until age 86.6, and would need to fund 21.6 years of retirement.

One problem with using life expectancy, however, is that the numbers are just averages; half will die before life expectancy and half will die after. So, it’s quite possible you will either dramatically underfund or dramatically overfund your retirement.

“Excellence in planning includes checking that the ‘bad case’ scenario is manageable, even if not desired,” says Hogan. “From a financial planning perspective, it’s OK if you die before expected. You will have had enough money for yourself and extra money will go to heirs. But if you die beyond life expectancy without having planned for that possibility, you end up potentially in the financial planning nightmare of having outlived your money.”

Others share this point of view. “Using life expectancy works great if you don’t live beyond life expectancy,” says Rick Miller, the founder and CEO of Sensible Financial Planning. “But there’s only a 50% chance of doing that.” Of note, Miller considers life expectancy as the highest spending/lowest saving method.

Planning to a date certain

According to Miller, planning to fund retirement to age 95 or 100 or 105 represents what he calls the lowest spending/highest saving method. It’s also a method that works well unless you live beyond the age — which is somewhat likely at 95, unlikely but possible at 100, and very unlikely but still possible at 105. Still, he says, this method gives you “much greater confidence you don't outlive your money.”

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Plan based on probabilities

Insurance companies use probabilities when pricing life insurance policies and the like. Those companies know, for instance, that about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. But, Miller says, it would be difficult for retirees to use probabilities to plan how many years of retirement to fund. It’s unclear, for instance, to determine how much to spend in retirement using this method. “If you are 50% likely to live to 85, and you do, how much should you spend at that age?” asks Miller.

How’s your health? In her financial-planning practice, Carolyn McClanahan, the founder of Life Planning Partners, uses health status to determine which method to use. “For people with a healthy lifestyle and no mitigating health factors, we use 100,” she says. “And for people with health issues or other mitigating factors, such as bad family genetics or a lifestyle that puts them on the road to health ruin, we run longevity projections using our software or Livingto100.com.”

However, she stresses that no one can predict the future and how long they are going to live. “The longer the life, the harder the prediction,” says McClanahan. “Our No. 1 question is ‘Are you enjoying your life now?’ and if they aren’t, we make sure we focus on helping them create a great life now so they have few/no regrets in the future.”

The best-case 'safe' scenario

For her part, Hogan uses what she calls the base-case “safe” scenario. That’s a method where plan to have enough inflation-protective lifetime income to cover the core of retirement expenses. “With that inflation-protected floor of income in place, portfolio wealth is then free to finance discretionary spending during your life as well legacy desires you may have,” says Hogan.

Think of it in terms of matching assets liabilities. “The asset is lifetime income,” she says. “The liability is lifetime personal spending. Social Security is the first layer of such lifetime income, supplemented with pension income, and then purchased lifetime income, from an income annuity and/or funds from your reverse mortgage.”